25 Jan 2011

Nicolas Sarkozy presses for an Financial Transaction Tax!

At a major press conference yesterday, the French president Nicolas Sarkozy made it clear that he was fully in favour of a financial transaction tax. But it's not the first time that world leaders have pushed for the idea - Gordon Brown and Angela Merkel have also supported the idea.

The problem is that the lobbying power of the markets is so strong that they can block progress (as they have been doing for months). And if nothing happens, the statements made by M. Sarkozy can just be thought of as a ploy to gain votes. It's clearly a very popular position to have, but merely being popular is not enough to change things.

One problem is that while FTTs are proposed as a way of punishing the financial sector, they are unlikely to get anywhere. However, if a flat rate FTT is introduced and at the same time, governments get rid of all the other inefficient and unfair taxation methods (VAT, income tax, taxes on profits), then just about everyone should agree that things would be better. The poor would save up to 20% in VAT everytime they buy things, middle income people would avoid both VAT and income tax, and entrepreneurs and businesses would be able to make money without shifting all their profits into offshore tax havens. Literally the only people who would be worse off would be the traders who are pocketting obscene bonuses for their speculation and gambling that is clearly of no use whatsoever to anyone except the traders themselves.

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